Real Estate View: Dodd-Frank Act puts owner financing at risk
Dolores DeMers/For the Sun-News
Posted: 10/24/2011 08:49:57 AM MDT
Dolores DeMers is the president of the Las Cruces Association of Realtors and works with RE/MAX
Editor's Note: This is another in a semi-regular column written by members of the Las Cruces Association of Realtors.
LAS CRUCES - Throughout the years owner financing has been a great vehicle for innumerable buyers who are capable of making regular payments on an amortized loan, but who don't qualify for traditional mortgage loan products. A typical real estate contract using owner financing requires proof of ability to perform, a substantial down payment, an agreement to the terms of the contract - contract amount, length of repayment period, interest etc.
The owner may either service the installment payments or have all payments handled through an escrow company. Owner financing has worked well for generations in this country, but now parts of the Dodd-Frank Act will severely restrict owner financing and will do harm to buyers and sellers.
Here are a few highlights:
The seller cannot be the builder of the home being financed. Why would the government want to restrict a builder from selling his own product on terms that are satisfactory to the buyer, particularly when the buyer is having a difficult time getting conventional financing? Would it be better for spec homes to go back to the bank?
The loan must amortize fully with no balloon mortgage allowed. Many sellers offering owner financing are older than 50. How many are going to outlive a 30-year note? With no short term balloon in place and because of the length of the note, the seller will have to steeply discount the note if he chooses to sell it to another party.
Buyer has three years to rescind the sale. The seller must document the buyer's ability to pay using underwriting requirements consistent with the Truth in Lending Act. If the seller makes even one small error, the buyer has up to three years to rescind the sale and demand back all the money that has been paid to the seller. This is regardless of the benefit the buyer has gotten from the use of the property during the time he had it. This is unacceptable; buyers should have some skin in the game. Sellers do not carry errors and omissions insurance and generally do not have the cash reserves in their business plan to sustain such a loss.
Only buyers who are already eligible for conventional financing will be able to use seller financing. The seller must determine in good faith the buyer's ability to repay the loan. Any buyer who is capable of passing the underwriting scrutiny of the Truth in Lending act doesn't need owner financing. The buyers who need the helping hand of owner financing won't be eligible.
Seller limited to three installment sales per year. A seller must become a licensed mortgage loan officer if more than three properties are sold in a year using owner financing. There are many citizens in New Mexico who helped the people in their communities get started on the path of home ownership through owner financing. They helped their buyers start building financial wealth and equity through their first real estate transaction. What difference does it make how many properties are offered as installment sales in a year as long as the seller has determined each buyer has a reasonable ability to repay the loan?
The Dodd-Frank Act treats owner financing as if it were predatory lending. It is not. Please contact your elected officials in Washington, D.C. to protect owner financing from these sweeping rule changes.
Dolores DeMers is the president of the Las Cruces Association of Realtors and works with Re/Max
Saturday, November 5, 2011
Sunday, June 19, 2011
Open Mic Sessions for Local Musicians
Published 6/17/11 in the Las Cruces Bulletin
The ‘Coyote’ continues to howl
By David Edwards
For the Las Cruces Bulletin
“We really are the grandfather of them all,” Bob Burns, founder of the Howling Coyote Coffeehouse and Open Mic, said. “We spawned the other open mics in town.”
Burns and his wife Melody started the Coyotein February 2005 and it really was an extension of something they did at home.
“When we were looking for a house to buy, one of the criteria was that it had to have a big enough living room so we could have music gatherings,” Burns said.
Burns had always thought that “Howling Coyote” would be a good name for a coffeehouse and it was always intended to be an open mic format.
At the time, the pastor at the Mastery of Life Center (now the Center for Spiritual Living) was very interested in having the church be a center for community activities. So the coffeehouse began presenting performance nights on the first and third Fridays of each month. Eventually, the Mesilla Valley Jazz and Blues Society also began meeting there. After four and a half years, the Coyote moved to a new space and is currently located at the First Christian Church on El Paseo Road.
Originally, the sign-up for performance started at 6:30 p.m. with the show beginning at 7 p.m., but the open mic became increasingly popular and the process switched to a lottery system with performers drawing numbers to determine theorder they appear on stage.
When all the performers are finished – the number is limited to 18, with each one allowed 10 minutes on stage – there is an open jam session which continues until everyone is ready to go home.
In addition to maintaining a positive, encouraging atmosphere – it is also family friendly with no alcohol or off-color material allowed – Burns is proud of the friendships and collaborations that have formed over the years.
“You hear someone play and they’re good so you ask them to play with you at a future gig,” he said. “There is a group called East Mesa that all met here and they are doing some really nice work together.”
Jack Rokowski is a fledging musician whose weapon of choice is the Hammond organ.
“If you are new in music, it is very productive to play in front of other people,” he said. “It’s really different than just playing at home. Howling Coyote offers that opportunity, plus you get to see what other people can do.”
“Our audiences are fun. They’re very encouraging,”Burns said. “They never make you feel bad– there’s no hook.”
Source: iTunes
If you are new in music, it is very productive to play in front of other people.
BOB BURNS, Howling Coyote founder
The ‘Coyote’ continues to howl
By David Edwards
For the Las Cruces Bulletin
“We really are the grandfather of them all,” Bob Burns, founder of the Howling Coyote Coffeehouse and Open Mic, said. “We spawned the other open mics in town.”
Burns and his wife Melody started the Coyotein February 2005 and it really was an extension of something they did at home.
“When we were looking for a house to buy, one of the criteria was that it had to have a big enough living room so we could have music gatherings,” Burns said.
Burns had always thought that “Howling Coyote” would be a good name for a coffeehouse and it was always intended to be an open mic format.
At the time, the pastor at the Mastery of Life Center (now the Center for Spiritual Living) was very interested in having the church be a center for community activities. So the coffeehouse began presenting performance nights on the first and third Fridays of each month. Eventually, the Mesilla Valley Jazz and Blues Society also began meeting there. After four and a half years, the Coyote moved to a new space and is currently located at the First Christian Church on El Paseo Road.
Originally, the sign-up for performance started at 6:30 p.m. with the show beginning at 7 p.m., but the open mic became increasingly popular and the process switched to a lottery system with performers drawing numbers to determine theorder they appear on stage.
When all the performers are finished – the number is limited to 18, with each one allowed 10 minutes on stage – there is an open jam session which continues until everyone is ready to go home.
In addition to maintaining a positive, encouraging atmosphere – it is also family friendly with no alcohol or off-color material allowed – Burns is proud of the friendships and collaborations that have formed over the years.
“You hear someone play and they’re good so you ask them to play with you at a future gig,” he said. “There is a group called East Mesa that all met here and they are doing some really nice work together.”
Jack Rokowski is a fledging musician whose weapon of choice is the Hammond organ.
“If you are new in music, it is very productive to play in front of other people,” he said. “It’s really different than just playing at home. Howling Coyote offers that opportunity, plus you get to see what other people can do.”
“Our audiences are fun. They’re very encouraging,”Burns said. “They never make you feel bad– there’s no hook.”
Source: iTunes
If you are new in music, it is very productive to play in front of other people.
BOB BURNS, Howling Coyote founder
Thursday, April 21, 2011
Las Cruces Sun-News article rankles real estate community
Census shows owning home can be expensive, By Steve Ramirez sramirez@lcsun-news.com
Posted: 04/17/2011 11:57:03 PM MDT
LAS CRUCES - All Sally Balderama could do is sigh and acknowledge it as a necessary evil.
"Where does it all go," muttered Balderama, referring to the bi-weekly paychecks she and her husband, Rudy, bring home.
She said the rising prices have taken a bigger bite out of her family's checkbook than she initially realized.
"The nickel-and-diming really does suck out a lot," Balderama said. "But, man, the cost of essentials, like food, clothing, and the mortgage all seem to take out a lot more than ever before."
Balderama agreed the value of her dollar has noticeably shrunk. But she is part of a big club in Las Cruces: the one that includes 65.9 percent of residents who own a home and have a mortgage payment to go with it.
The average monthly housing cost for city homeowners was $1,108 from 2005 to 2009, based on 2010 U.S. Census data. For homeowners who didn't have a mortgage it was $308, and it was $662 for renters.
Las Cruces' housing costs are comparable to New Mexico's averages. Statewide, the median monthly housing costs for mortgaged owners was $1,158 - $50 more than the city's average, $295 for non-mortgaged owners, and $659 for renters.
Las Crucen Kyle Finch, an engineer, agreed the part of the American dream of owning your own home could be an expensive proposition. The latest Census Bureau data shows 33 percent of city homeowners with mortgages, 11 percent of those without mortgages, and 55 percent of renters spent 30 percent or more of their monthly household income on housing.
In Dona Ana County monthly housing costs are a little cheaper. For people with a mortgage it's $59 less, $13 lower for a homeowner without a mortgage, and $51 for renters.
"If I could've known then what I know now, I wouldn't have built a custom home," said Finch, who's mortgage payment is almost $1,700 a month. "I got what I wanted, but, boy, it's ended up being more of a drain on my family's wallet than I definitely would've hoped for. We've only had the house now for a little more than four years, and I'm not in a position yet where I can think about refinancing it. We'll just have to keep working harder, scrimping a little more, to work it all out."
But it could have been worse. The average monthly housing cost for Americans with a mortgage is $1,486, and $419 for those without a mortgage, $817 for renters. More than one-third of Americans with a mortgage, 50 percent of renters, and 16 percent of homeowners who have paid off their mortgage spent 30 percent or more of their income on housing from 2005 to 2009.
Steve Ramirez can be reached at sramirez@lcsun-news.com; (575) 541-5452.
This article created some ill-will towards the LC Sun-News among the real estate community. I spoke with the reporter about his content. He said the headline to the story was written by someone else and it was not his intent to suggest that renting a home is preferable to owning it. He was emphatic that it was more cost effective to purchase a home than to rent it.
My response to the newspaper is as follows, though it will be edited for size when it appears in the Op-Ed section of the newspaper soon.
On behalf of homeowners throughout our community and the nation, I feel a response is warranted to the front page article, “Census shows owning home can be expensive,” April 18, 2011. I have spoken with the reporter, Steve Ramirez, who had no part in writing the headline. He told me his article did not suggest owning a home could be more expensive than renting. Maybe not, but his article did say “part of the American dream of owning your own home could be an expensive proposition.” We rely upon journalists to present the facts so the readers understand all the issues of a topic. It’s time to review real facts about home ownership.
When you own a home, you either own it outright or you make regular payments on it that build equity. The alternative to home ownership is to pay rent, or be homeless. Renting is a great option for people who don’t want a long term commitment, but there is no return on the investment. Owning a home contributes to financial wealth, renting a home deducts from it. In my conversation with Mr. Ramirez, he agreed that renting a home is much more expensive than owning it.
However, the topic of real costs/benefits of home ownership vs renting is much greater than dollars spent. There have been many scientific studies done over several decades on these themes. Here is what we know for sure: People who own their home have greater educational achievements and earn more income, and they encourage their children to do the same. They tend to manage their money better. They are more involved in civic matters and more likely to vote. They volunteer more often and contribute more to charity. They have more control of their lives, and better physical and mental well-being. They maintain their homes and look after their neighbors. There is less crime in neighborhoods having owner occupied homes and less need for public assistance. The children of homeowners are less likely to drop out of school, have teenage pregnancies, or get involved in criminal behavior. The overall benefits of home ownership to the community and the nation compound as you go from one socio-economic indicator to another. On a personal level, home ownership is a decision that financial planners favor. But at the local or national level, it is a good indicator of a stable society. Regardless of the economy, the merits of home ownership remain as steadfast as ever.
Posted: 04/17/2011 11:57:03 PM MDT
LAS CRUCES - All Sally Balderama could do is sigh and acknowledge it as a necessary evil.
"Where does it all go," muttered Balderama, referring to the bi-weekly paychecks she and her husband, Rudy, bring home.
She said the rising prices have taken a bigger bite out of her family's checkbook than she initially realized.
"The nickel-and-diming really does suck out a lot," Balderama said. "But, man, the cost of essentials, like food, clothing, and the mortgage all seem to take out a lot more than ever before."
Balderama agreed the value of her dollar has noticeably shrunk. But she is part of a big club in Las Cruces: the one that includes 65.9 percent of residents who own a home and have a mortgage payment to go with it.
The average monthly housing cost for city homeowners was $1,108 from 2005 to 2009, based on 2010 U.S. Census data. For homeowners who didn't have a mortgage it was $308, and it was $662 for renters.
Las Cruces' housing costs are comparable to New Mexico's averages. Statewide, the median monthly housing costs for mortgaged owners was $1,158 - $50 more than the city's average, $295 for non-mortgaged owners, and $659 for renters.
Las Crucen Kyle Finch, an engineer, agreed the part of the American dream of owning your own home could be an expensive proposition. The latest Census Bureau data shows 33 percent of city homeowners with mortgages, 11 percent of those without mortgages, and 55 percent of renters spent 30 percent or more of their monthly household income on housing.
In Dona Ana County monthly housing costs are a little cheaper. For people with a mortgage it's $59 less, $13 lower for a homeowner without a mortgage, and $51 for renters.
"If I could've known then what I know now, I wouldn't have built a custom home," said Finch, who's mortgage payment is almost $1,700 a month. "I got what I wanted, but, boy, it's ended up being more of a drain on my family's wallet than I definitely would've hoped for. We've only had the house now for a little more than four years, and I'm not in a position yet where I can think about refinancing it. We'll just have to keep working harder, scrimping a little more, to work it all out."
But it could have been worse. The average monthly housing cost for Americans with a mortgage is $1,486, and $419 for those without a mortgage, $817 for renters. More than one-third of Americans with a mortgage, 50 percent of renters, and 16 percent of homeowners who have paid off their mortgage spent 30 percent or more of their income on housing from 2005 to 2009.
Steve Ramirez can be reached at sramirez@lcsun-news.com; (575) 541-5452.
This article created some ill-will towards the LC Sun-News among the real estate community. I spoke with the reporter about his content. He said the headline to the story was written by someone else and it was not his intent to suggest that renting a home is preferable to owning it. He was emphatic that it was more cost effective to purchase a home than to rent it.
My response to the newspaper is as follows, though it will be edited for size when it appears in the Op-Ed section of the newspaper soon.
On behalf of homeowners throughout our community and the nation, I feel a response is warranted to the front page article, “Census shows owning home can be expensive,” April 18, 2011. I have spoken with the reporter, Steve Ramirez, who had no part in writing the headline. He told me his article did not suggest owning a home could be more expensive than renting. Maybe not, but his article did say “part of the American dream of owning your own home could be an expensive proposition.” We rely upon journalists to present the facts so the readers understand all the issues of a topic. It’s time to review real facts about home ownership.
When you own a home, you either own it outright or you make regular payments on it that build equity. The alternative to home ownership is to pay rent, or be homeless. Renting is a great option for people who don’t want a long term commitment, but there is no return on the investment. Owning a home contributes to financial wealth, renting a home deducts from it. In my conversation with Mr. Ramirez, he agreed that renting a home is much more expensive than owning it.
However, the topic of real costs/benefits of home ownership vs renting is much greater than dollars spent. There have been many scientific studies done over several decades on these themes. Here is what we know for sure: People who own their home have greater educational achievements and earn more income, and they encourage their children to do the same. They tend to manage their money better. They are more involved in civic matters and more likely to vote. They volunteer more often and contribute more to charity. They have more control of their lives, and better physical and mental well-being. They maintain their homes and look after their neighbors. There is less crime in neighborhoods having owner occupied homes and less need for public assistance. The children of homeowners are less likely to drop out of school, have teenage pregnancies, or get involved in criminal behavior. The overall benefits of home ownership to the community and the nation compound as you go from one socio-economic indicator to another. On a personal level, home ownership is a decision that financial planners favor. But at the local or national level, it is a good indicator of a stable society. Regardless of the economy, the merits of home ownership remain as steadfast as ever.
Tuesday, April 19, 2011
Article from Las Cruces Bulletin Neighbor to Neighbor 4/15/11
One of my duties as President of the Las Cruces Association of REALTORS is to write articles for the Neighbor to Neighbor published by the Las Cruces Bulletin. It is reprinted here with permission.
Is homeownership relevant?Real estate has had much negative publicity since the downturn in the real estate market caused some homeowners to feel their home might be more of a risk than an asset. I felt this topic should be addressed directly in my first article as president of Las Cruces Association of Realtors.
The real estate sector in this country has taken a beating the past few years, and many people are wondering if homeownership is right for them. We’ve had chronic negative publicity about the meltdown of the real estate economy. All of us were harmed by speculative buying and risky mortgage products, however, most people are paying their mortgages on time, every time and they love their homes.
Yes, real estate market values have decreased in this correction cycle, but they will improve over time. A home is not a cash cow, but as part of a financial portfolio, it is more stable than a wildly fluctuating stock market.
There is a larger picture of homeownership. It is incredibly important to the structure and quality of life of any community. People who own and live in their homes have a strong interest in taking care of their investment.
They care about what is going on in their neighborhood and the direction government leaders are taking. They’re more motivated to communicate with their elected officials. Homeowners are more likely to participate in civic leadership. Renters, by the nature of their tenancy, generally do not share in this level of stewardship.
The difference between a neighborhood of owner-occupied homes and a neighborhood of tenant-occupied investment properties is a very compelling argument for promoting home ownership in every possible way. There are good landlords and property managers who do an excellent job of maintaining their investment portfolio, but a bad landlord or low-quality tenant can be like a virus, spreading disease and decay to the property or neighborhood and beyond.
Homeownership is as relevant today as it ever was. Homeowners have more control and personal satisfaction in their lives, and more commitment to their communities. It is in everyone’s best interest to get the real estate market back on track. With the interest rates still at historic lows and the low market pricing, the buyer with a realistic down payment and view toward the long-term commitment is in a good position for one of the best times ever to participate in the American Dream of homeownership.
Is homeownership relevant?Real estate has had much negative publicity since the downturn in the real estate market caused some homeowners to feel their home might be more of a risk than an asset. I felt this topic should be addressed directly in my first article as president of Las Cruces Association of Realtors.
The real estate sector in this country has taken a beating the past few years, and many people are wondering if homeownership is right for them. We’ve had chronic negative publicity about the meltdown of the real estate economy. All of us were harmed by speculative buying and risky mortgage products, however, most people are paying their mortgages on time, every time and they love their homes.
Yes, real estate market values have decreased in this correction cycle, but they will improve over time. A home is not a cash cow, but as part of a financial portfolio, it is more stable than a wildly fluctuating stock market.
There is a larger picture of homeownership. It is incredibly important to the structure and quality of life of any community. People who own and live in their homes have a strong interest in taking care of their investment.
They care about what is going on in their neighborhood and the direction government leaders are taking. They’re more motivated to communicate with their elected officials. Homeowners are more likely to participate in civic leadership. Renters, by the nature of their tenancy, generally do not share in this level of stewardship.
The difference between a neighborhood of owner-occupied homes and a neighborhood of tenant-occupied investment properties is a very compelling argument for promoting home ownership in every possible way. There are good landlords and property managers who do an excellent job of maintaining their investment portfolio, but a bad landlord or low-quality tenant can be like a virus, spreading disease and decay to the property or neighborhood and beyond.
Homeownership is as relevant today as it ever was. Homeowners have more control and personal satisfaction in their lives, and more commitment to their communities. It is in everyone’s best interest to get the real estate market back on track. With the interest rates still at historic lows and the low market pricing, the buyer with a realistic down payment and view toward the long-term commitment is in a good position for one of the best times ever to participate in the American Dream of homeownership.
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